Bright Prospects For New Wal-Mart General Counsel
On Friday, Wal-Mart Stores Inc. promoted Jeff Gearhart to general counsel and named former counsel Tom Mars as chief administrative officer.While it’s still unclear what Mars’ new position will look like – a mix of key human resource functions for the U.S. including diversity, compensation, talent development, and employment practices and policies, and compliance – he might have left an enviable position for Gearhart to step into.
Wal-Mart Stores Inc. outperformed other retailers, releasing better-than-expected fourth-quarter earnings this past Tuesday. Wal-Mart has been one of the few bright spots in retailing as financially squeezed shoppers look for cheaper options and cut back to necessities during the recession (The Associated Press).
That said, the Company is hardly immune from economic pressures. Last week, Wal-Mart announced that it will cut up to 800 jobs at its headquarters as it makes changes, including cutting the number of new stores it will build this year. It's also cutting inventory. However, all things considered the retail giant is healthy and weathering the storm relatively unscathed.
Even the large class action lawsuits that beleaguered the retail giant is showing signs of going Wal-Mart's way. A federal appeals court gave Wal-Mart another chance Friday to derail the nation's largest-ever civil rights suit, a class action by 2 million past and present female employees who accuse the retail giant of discriminating in pay and promotions (The San Francisco Chronicle).
The Ninth U.S. Circuit Court of Appeals in San Francisco said a majority of its judges had voted to grant Wal-Mart a new hearing in its appeal of rulings that have allowed the case to proceed as a nationwide class action, rather than as separate lawsuits by each woman who chooses to file one. An 11-judge panel will hear the case on a date yet to be scheduled (The San Francisco Chronicle).
In the original 2001 lawsuit filed in San Francisco, six female workers claimed Wal-Mart paid women less than men and give them fewer promotions.
Wal-Mart Executive Vice President and General Counsel Jeff Gearhart hailed the appeals court decision as a "positive step" in the litigation (Legal Newsline).
"It is important to note that the merits of this case have not been considered by the courts, and we believe the experiences alleged by the six individuals who brought this suit are not representative of the experiences of our female associates," Gearhart said in a statement (Legal Newsline).
Could things get any better for Gearhart? How about a sizeable compensation package that could reach into the seven figures? In this time of doom and gloom for most in-house counsels, it’s good to be Gearhart.
Is Changing One’s Practice Area During a Downturn a Good Idea?
"I have been practicing as a litigator for the last eight years with a law firm and I am ready to make a change. I am not interested in becoming a partner. Ideally I’d like to go in-house. I did a short internship with a company and I really enjoyed it. However, when I look around there are very few in-house litigation positions available. The one’s I have applied for have been so competitive that I’ve never come close to an offer. I am an accomplished litigator working for a big law firm, but I am not a Harvard law school partner with twenty years of trial experience. I am trying to transfer to a transactional practice to improve my chances of moving in-house. It’s nearly impossible to do at my firm as our own transactional attorneys have just enough work to sustain their practice, and I do not want to jeopardize my position there. I’ve tried to apply to more junior-level and temporary transactional positions with both law firms and companies, but I am being told either that I don't have sufficient experience, or that I am too qualified to take a junior role. I know the economy is not good, but what can I do to change practice areas?” Desperately Seeking New Practice.- Are you sure you want to set aside eight years of litigation, just to improve your chances of going in-house?
- Are you sure that a practice switch will help you secure an in-house position?
- Has your short in-house exposure been sufficient for you to give up the law firm practice altogether?
- How do you know that you will enjoy or be successful as a transactional attorney when you have not had any experience in this area?
Assuming you’ve considered some of these questions, and you are still ready to start over as a transactional attorney, there are a few other things to consider. Yes, the economy is not good, but even in the best of times “practice switchers” have a hard time making that transition.
Consider this: Why would anyone hire you in your chosen new practice area when they have hundreds of applicants with extensive practical experience in that field? Law firms are not known for being risk takers or for thinking outside the box when it comes to hiring. They are a business trying to maximize their profits, and when you consider the investment it takes to hire and train an associate, the return on this investment has to make sense. Given the choice, they will hire an experienced transactional attorney, or a junior attorney with some transactional experience, rather than an experienced litigator without any transactional experience.
What if I am willing to take a pay cut and take a junior-level position?
Your rationale makes sense - both the law firm and the clients would benefit from your years of experience as lawyer, even if practice-wise you were still a bit green. Unfortunately, the issue is not quite that simple.
There is the issue of training which can be expensive, and rocking the class boat which law firms are steering clear of. In other words, if you joined a firm as a junior associate, you would be given assignments to help you train as a transactional attorney. These would be relatively simple projects, or pieces of larger, more sophisticated deals.
But after a while, if you are as good as you should be at your level, you will not very challenged with these assignments. You will find yourself asking for more sophisticated work, more client contact, and more responsibility. Suddenly those loyal senior associates who have given their blood, sweat and tears to their firm for the past 8-10 years will see that there is yet one more person being pushed ahead of them. Their loyalty and perseverance will have been diminished by a comparatively newcomer to the firm. Morale is a fragile, an intangible element that law firms don’t like to tinker with, especially when they don't have to.
What about companies giving me a shot?
Corporate legal departments are not good training grounds. Companies that hire in-house counsels are looking for attorneys who are self-sufficient, who can work independently, with little support, and almost no supervision. This is not a place where you will be taught skills, or have much of an opportunity to learn from more senior counsel. It will be assumed that you are already skilled in your practice area, can handle all of the documentation and processes that come with it, and can now provide strategic advice to your company, and oversee the legal work of potentially more experienced outside counsels.
The economy makes a difference. During a downturn, it’s better to stay put.
Firms and corporate legal departments are shedding staff. Nobody likes to have to do that. Why would they take on someone from the outside to retrain when they could have one of their own to retrain, or get 100 resumes tomorrow of candidates who already have the practice experience they need? If you can think of an answer, that is your way in; if not, I fear your prospects are bleak.
In a competitive job market, attorneys who are looking to switch practice areas will have very few opportunities to do so, unless they are switching to a practice area where candidates are in short supply and demand is high. A transactional attorney looking to transition into bankruptcy, or a litigator looking to specialize in bankruptcy litigation may have better prospects. However, in a down economy like ours, there are very few practice areas where candidates are in short supply. And demand has never been lower.
If you are still doing well at your current firm, I would encourage you to wait for the market to turn before switching practice areas. If you are still convinced that changing discipline is the answer, then I would suggest taking training courses, and acquiring practical experience by getting involved in pro bono projects, or by volunteering your services to non-profits and legal aid organizations.
At least, by exploring ways to acquire practical experience, you will be able to determine whether this is something you enjoy and want to commit to when the market turns around. Moreover, you will have acquired some technical and practical skills, and hopefully be more competitive when opportunities present themselves. Good luck!
Merrill Slashes Senior Legal Jobs, Including the General Counsel
Senior legal roles at Merrill Lynch have been axed as part of the investment bank's global restructuring, including the investment bank's vice chairman and general counsel Rosemary Berkery, and general counsel of litigation and employment Barry Mandel.
New York associate general counsel Carlos Morales, co-head of global litigation John Eisenberg, and director and senior counsel Chris Haas remain with the bank's the legal department.
The move comes after Bank of America's $50bn acquisition of Merrill Lynch last September (22 September ).
A Bank of America spokesperson said: "Bank of America expects to eliminate 30,000 to 35,000 positions over the next three years, reflecting the merger with Merrill Lynch and the weak economic environment, which is affecting the level of business activity. The reductions are coming from both companies and affect all lines of business and staff units."
It is thought the majority of the combined bank's cuts will be made in New York with the capital markets headcount expected to be reduced by approximately 30-40 per cent.
[Source: The Lawyer, by Julia Berris, published Jan. 27, 2009; Corrected on Jan. 31, 2009]
How to Land That Coveted In-House Job.
When you are looking out that big law firm window, wondering if there is a better world out there, it’s not unusual for your mind to start imagining life in-house. You are probably fantasizing about shorter workdays, free weekends, longer vacations, and fewer people looking over your shoulder just waiting for a chance to pounce on the slightest mistake – in other words less stress and a personal life.Surely, with your pedigree and legal skills, companies will be vying for your candidacy, and you will be able to land a comfortable in-house job at a company in no time. Well, at least that’s what you believed until you began that fateful in-house job search.
Perhaps what you did not completely realize was the competition level you were facing, coupled with the actual number of in-house positions available. You were not the only attorney looking out of that window and circulating that resume for an in-house spot. In fact, 80% of your peers were doing the exact same thing, applying for the same limited number of positions.
The in-house job market is extremely competitive – it is a market with a large candidate pool, and limited opportunities. For every available in-house position, a company will easily receive hundreds of resumes, and take its the time to hire that one perfect superstar. In the process, a number of outstanding attorneys who would be the pride and joy of the most selective law firms in the country, will be left out in the cold, licking their wounds, and looking again for the next opportunity.
The other reality is that in-house jobs may not be as rosy as you may have imagined. Sure, you’ll take a pay cut to reduce your current stress level and polish up those business skills you’ve been so eager to use. But how deep are you willing to go? The sticker price may completely shock you (see our previous Blog “Are You Ready to Go In-House?”).
Most law firm attorneys expect to take a 20-30% cut from their law firm compensation, while the reality is that most law firm attorneys transitioning in-house experience compensation reductions ranging between 50%-70%. The median base salaries for in-house attorneys with 5-10 years of experience ranges between $100,000-$150,000 per year, with bonuses averaging 20%-30% of base. At the end of the day, you may end up making less than that first-year associate you are currently training.
Finally, while you may get a break from your current hectic law firm pace, this will not be a vacation by any stretch of the imagination. In-house lawyers work hard, put in long hours, and are on the front line of business decisions – taking the fall when the company is not doing well, whether or not they had any actual responsibilities for them.
Still ready to make that jump? If I have not scared you away, here are a few things to consider when trying to land that in-house spot:
1. Don’t Try to Fit a Square Peg In a Round Hole.
Now that I’ve told me how few in-house positions there are available, and the number of applicants per job – you may be tempted to try to work the numbers in your favor, and apply to as many positions as possible.
If I had a dollar for every candidate applying for in-house jobs they were clearly not qualified for, I would be enjoying early retirement in the tropics. Remember: companies are looking for an exact fit – not an approximate fit. They are not willing to take a leap of faith, to train you, or consider you simply because you are a good attorney, motivated, with good credentials.
You need to meet every single requirement the position calls for; otherwise, you will be wasting your time. And, be honest with yourself. The fact that you think your skills are transferable, or that you have the capacity to do the job is not enough. You need to be able to check every single item with complete confidence – that’s true about the experience level, industry experience, type of skill required, and incidentals such as language skills or sub-specialties.
2. There Are No Shortcuts Methods – Networking is the First Step.
You need to get the word out, and while you may be worried about confidentiality, it’s a small risk to take in terms of the potential pay off. You need to start going through your professional address book and renew and/or refresh your connections. The best way to cut through the long stack of resumes is to have someone vouch for you, or tell you about a position before it becomes available to the general public. This is a good opportunity for you to start expanding your network and to get involved in your legal/local community.
You can work with a legal search firm as well, but it is by no means a shortcut. It is no substitute for networking. First, you need to do a little homework and reach out to search firms that either specialize in or have a significant part of their practice dedicated to in-house search. Secondly, you need to contact more than one search firm. In-house searches tend to be handled on an exclusive basis – one search firm for one particular position/company; therefore, every search firm has its select list of clients and positions, which may not be representative of all the opportunities available in the marketplace.
Finally, search firms conducting in-house searches are company-oriented. In other words, they are focused on filling the positions for which they have been hired, not on finding jobs for candidates. While you should provide your information to search firms, so they can contact you when they have a position available; you should not expect them to pitch your resumes to companies or create opportunities for you. Companies generally don't want search firms to send on resumes unless the company has already identified a new need and asked the search firm to assist it with the search. So although you may be a great candidate, a search firm is typically constrained by the number of companies that have engaged it to conduct searches for them.
3. All Good Things Come To Those Who Wait, and Wait, and Wait…
How long does it take to land an in-house job? Well, it depends on your qualifications, experience, flexibility, and the market in general. That said, for the most part, it takes about six months to a year, for most applicants to land a position. This is not for the faint of heart or impatient. You will have to endure a lot of rejection before landing that coveted in-house position.
Why? Because of one crucial distinction between law firms and companies. While associates and partners are an integral part of the law firm’s “profit centers” and help generate millions of dollars in revenues on behalf of the firm, when they transition in-house, they become “part of the overhead.” In-house counsels, with very few exceptions do not generate revenues. At best, they protect a company from liability. Unlike a law firm that sees the hiring of associates and partners as a means to increase productivity and revenues, companies must determine whether hiring an attorney in-house is cost effective, in both the short and long run. Therefore, companies tend to hire fewer attorneys in light of the work available, and are much more deliberate in their decision to expand their legal department.
The type of position you are seeking will also determine your wait. Corporate legal departments, unlike their law firm counterparts, are triangular. The higher the level, the fewer jobs there are available. Most of the senior-level positions tend to be filled from within, by in-house counsels who have bid their time and are ready to get promoted. So if you are holding off for a more senior-level position within a company, you may have to wait that much longer for the opportunity to become available.
Conclusion.
Don’t get discouraged. While the process can be long and difficult, the payoff is worth it. Most lawyers who made the transition with open eyes insist that going in-house was a decision they would make again. Gripes and all, in-house lawyers are nearly unanimous in preferring the more complex path they've chosen.
While, searching for an in-house job may be challenging, keep in mind the tips above to improve your chances of success.
Nokia Ends GC Search With An Internal Promotion
Nokia has found a new global general counsel after a 10-month search, deciding to promote internally for the role. Pentland's appointment comes as Nokia faces a grueling series of patent disputes in the High Court. To add to the company's IP woes, Bird & Bird hired Nokia's head of European patent litigation in February this year. Ari Laakkonen joined the firm as a senior consultant after spending four years at Nokia managing litigation across European jurisdictions.
Nokia is facing four separate patent license disputes against Interdigital Technology Corporation, with the hearings due for April, June and October 2009 as well as one in October this year. Bird & Bird is acting for Nokia, facing Wragge & Co on the other side. The present generation of software aims to support work within each of these functions, and provide solution for larger-scale virtual office teams and projects.
And where there might be a technological gap, what better place to test out this model than in Silicon Valley?
It's certainly a model worth trying out - both for attorneys looking for a more balanced lifestyle, and for corporate clients looking for more reasonably priced legal services. It's a win-win proposition.
Bowing Out Gracefully: How to Give Notice
You have just landed a job offer! You are experiencing the elation of finally achieving your goal. However, you face one immediate challenge: telling your present employer you are leaving.You have been concentrating on getting the position you were seeking so much that you have postponed planning your exit. Get past the guilt and strategize as to whom, how and when you will give notice that you are leaving.
When on the verge of a life changing decision, it is easy to look forward and forget to tie up the details of the situation you are leaving. It is important, however, to take the time to wrap up your prior situation appropriately and professionally before moving on.
1. Whom to tell first?
I suggest you prepare a short letter of resignation to your direct supervisor and delivered it in person. Next, you should break the news to your colleagues with whom, and for whom, you worked.
Remember that news travels fast. Make sure you have several hours to "make the rounds," and try not to leave out anyone who would be hurt to hear the news from anyone but you personally. You may have had a cordial and, perhaps, a very personal, yet professional, relationship with your colleagues. In that case, you should make sure to tell these people how they helped your career, that you will miss seeing them on a daily basis and that you plan to keep in touch.
Once you have told someone that you are leaving, the news will move like the speed of sound or, with the advent of email, light. You should then follow the established procedure at your firm or company and give notice that you are departing. In that regard, you must ascertain the length of time you will stay at your current firm/company before you finally depart.
There are several factors to consider when giving notice. First and foremost, you should preserve the positive view that your current employer has of you. At a minimum, you should approach the immediate supervisor you have worked with and have had a pleasant rapport, and cement your relationship and get a firm commitment from them that they will provide you with terrific references in the future.
Tell them that you have enjoyed working with them, that you admire their ability, and that the reason you are leaving has nothing to do with them but rather has to do with your career choices or personal situation. They undoubtedly will be helpful and encouraging to you and, in most cases, will be honored to provide you with solid recommendations if the need ever arises.
Whatever the reasons for your departure, do not burn your bridges! The offer you have just received may be contingent upon you providing good references. Even if the offer has no conditions, don't forget that your past employers will act as your future references. An unfavorable or mediocre reference could be the reason an employer decides not to extend you an offer.
Even though it is illegal in some states to divulge more than your dates of employment and salary history, if your former employer is left with a bad taste in his or her mouth, unflattering information may likely be communicated about you through the grapevine. Even if you worked in the most awful of circumstances, resist the temptation to "tell off" your former employer. It could very well come back to hurt you. Simply, reinforce your bond with your colleagues and move on.
2. How long should I endure the unemotional goodbyes?
The next step is to determine how long of a notice you should give. The operative word here is should and not want. With very few exceptions, the minimum amount of notice you should give is two weeks.
If your group is very busy, and your leaving will jeopardize the proper and adequate representation of the clients you serve, you should give more than two weeks notice and explain to your future employer the circumstances that you find yourself under. Your future employer will, in most cases, understand your predicament because the employer can foresee itself in a similar situation. Plus, this is yet another chance for your future employer to see how conscientious and professional you are in representing your clients.
3. When should I give notice?
You should give notice as soon as you have a written offer from your future employer, and you have accepted the offer. With some exception, you should never give notice if any condition of the offer has not yet been met. The only exception is if the employer wants to check your references at your present firm or company.
If you are certain that someone you have worked with at your present firm will provide your future employer with an excellent recommendation that they hire you, and feel comfortable that the conditions on your offer will soon be satisfied, then you may confidently give notice of your impending departure.
On the other hand, if you are unable to name someone at your present firm or company who will act as a good reference, your situation is more complicated and is a matter for another discussion outside the scope of this article.
In any event, you either have to be frank and explain to your future employer why you are unable to identify someone at your present firm or company to provide you with stellar recommendation, or hope that you are not asked for a reference from your potential employer.
4. Any last acts?
Make sure to say goodbye in person to supervisors, colleagues and others with whom you had worked with during your tenure at the company/firm. People recall good deeds, and your last act will be remembered for a long time. It does not cost anything. It will solidify the alliances you have formed with other attorneys who may yet become your close allies once again in the future. It will endear you to those with whom you labored to get that brief filed two minutes before the court's doors closed. It is also just the most decent thing to do.
Departing emails are fine, but should be used judiciously. I tend to think that it best to stay away from them altogether and make the rounds in person. Since you already have bid your farewell in person to those with whom you had worked, a general note saying you enjoyed working at the firm and that you wish everyone well is adequate but not necessary. If you must, name just a few people that you would like to specifically thank. But this is dangerous, as those not included will feel slighted.
Finally, include your forwarding information in case someone wants to contact you later. It is a nice gesture which tells everyone that you will continue to consider them as colleagues and, perhaps now, simply as friends.
Are You Ready to Go In-House?
If I had a dollar for every time I heard a law firm associate tell me “I want to go in-house,” I would be enjoying my retirement on a tropical island in the South Pacific. The allure of taking one’s practice in-house is understandable, and in many cases, quite appropriate.
The opportunity to take an active role in a client's business decisions, to focus on the growth of one client and one industry, to part with billable hour requirements and business development responsibilities, and operate within a more predictable and sometimes less taxing schedule, are all very compelling reasons to make that transition. But how do you know whether you are ready to make the move in-house?
There is a notable difference in wanting to go in-house and being ready to go in-house. No matter how enticing the opportunity might turn out to be; unless you are truly ready for it, it might not be the successful transition you were hoping for. How do you know whether you are ready? Here are some questions to consider in determining whether you are ready to make that leap in-house:
Do You Have the Experience?
When you consider that 75% of associates leave private practice by their fifth year of practice (NALP 2005), it is not surprising to see a number of junior associates banging on corporate doors to transition in-house. Obviously most in-house job postings will include the minimum level of experience required for the position – but is meeting the minimum requirement enough? Not necessarily.
Companies that hire in-house counsels are looking for attorneys who are self-sufficient, who can work independently, with little support, and almost no supervision. Sounds like an ideal proposition? Yes, but consider the following: this also means that corporate legal departments are not good training grounds either. This is not a place where you will be taught skills, or have much of an opportunity to learn from more senior counsel. It will be assumed that you are already skilled in your practice area, can handle all of the documentation and processes that come with it, can provide strategic advice to your company, and can oversee the legal work of potentially more experienced outside counsels.
In light of what companies expect from their attorneys, it is recommended that you stay in private practice for at least five (5) years before you consider making a transition in-house. While the level of responsibility and training tends to vary on an individual basis, and from firm to firm; this minimum threshold can at least ensure that you have had the opportunity to be exposed to the various documentation and processes of your practice area.
While law firms continue to have a dubious reputation in terms of the quality of their training, they remain the best place for junior attorneys to acquire experience and develop legal skills. Corporate legal departments for the most parts are thinly staffed, and therefore provide you with more limited access to experienced counsels (and sometimes no access whatsoever) to whom you could go for support or advice. And remember, if you are thinking about picking up the phone to call an outside counsel to get advice, it will cost you and your company. Corporate legal departments operate under strict budgets – they do not provide for this type of on-the-job training. Corporate legal departments also tend to work with fewer resources, in terms of libraries, software programs, continuing legal education programs etc. Finally, the work you will be required to handle in-house, will demand that you not only be able to draft, revise, and negotiate or explain the various documents associated with the transaction or litigation matter, but that you take it a step further and advise your client on what strategy and steps they need to take to meet their business objectives.
The longer you stay in private practice, the more valuable you will become to a company, and the more likely you will be able to succeed in-house. The best time to transition your practice in-house is generally between your fifth year and tenth year of practice, or right before partnership. Why before partnership? Because by the time you make it to partnership, you may have become either too expensive, or too dependent on your high compensation package, to be able or ready to absorb the salary cut you will need to take when moving in-house.
Are You Ready for a Salary Cut?
When speaking with attorneys who are ready to make that in-house transition, I invariably hear the same message, “I am ready to take a salary cut for the right opportunity.” They seem candid and honest about their willingness to give up a portion of their law firm compensation to move in-house, and they generally are. However, very few tend to understand just how much of it they will have to give up to make that move. That’s understandable; where law firms make their compensation public knowledge and generally align themselves in terms of their size and geographical locations, corporate legal departments are not only more guarded about their figures, but are also much more unpredictable – as compensation can vary greatly depending on a company’s size, industry, location, and financial situation.
The only in-house figures that seem to gather the attention of the press, and therefore those that are readily available to the general public are the compensation figures of Fortune 500 general counsels. In fact, those figures are typically those of the 100 highest-paid general counsels at Fortune 500 companies. In 2006, the average cash bonus and restricted stock grant received by this group approached $2 million. In addition, more than half of the group cashed in stock options in 2005, with an average gain of $3.1 million. In comparison, the average profit taken home last year by an Am Law 100(R) partner at the nation's 100 top-grossing firms was $1.1 million.
Top earners like Thomas Russo, Lehman Brothers Holdings Inc.'s vice-chairman and chief legal officer, takes home a whopping $21.2 million, with $450,000 in salary, $4.6 million in bonus, and $16 million in stock option cash-ins. Occidental Petroleum Corporation's Donald de Brier received nearly $7.2 million in stock options in fiscal year 2005, while MGM Mirage's Gary Jacobs got a sweet $5.5 million in options.
While not everyone has the grandiose ambition or the profile to become a Fortune 500 general counsel – these figures have a tendency to skew the expectations of attorneys wanting to make the jump from law firms to corporate legal departments. Most law firm attorneys expect to take a 20-30% cut from their law firm compensation, while the reality is that most law firm attorneys transitioning in-house experience compensation reductions ranging between 50%-70%. The median base salaries for in-house attorneys with 5-10 years of experience ranges between $100,000-$150,000 per year, with bonuses averaging 20%-30% of base.
Most attorneys who hear these figures gripe, “It’s not market.” It’s easy to understand why. The salary wars waged by large law firms around the country increasing first-year associate salaries to $145,000 and $160,000, as well as incremental increases of other classes by as much as $15,000 have done little to provide law firm attorneys with a realistic understanding of their worth in the corporate legal market.
They forget one crucial distinction between the law firm and in-house environment. While associates and partners are an integral part of the law firm’s “profit centers” and help generate millions of dollars in revenues on behalf of the firm, when they transition in-house, they become “part of the overhead.” In-house counsels, with very few exceptions in the licensing area, do not generate revenues. At best, they protect a company from liability. Unlike a law firm that sees the hiring of associates and partners as a means to increase productivity and revenues, companies must determine whether hiring an attorney in-house is cost effective, in both the short and long run. The value proposition changes drastically, and therefore, so does the compensation.
The question that each attorney must resolve in his mind, is whether he or she can absorb the cost of transitioning in-house – as for most of them, there will be a significant monetary tradeoff.
Can You Handle The Limited Career Path?
By now, some of those left with the experience and the willingness to make the financial sacrifices may think that it’s just a matter of time before they make their way to a more senior-level position or take the general counsel position. Well, not so fast.
According to a 2005 Survey conducted by Corporate Counsel, nearly seventy-five percent (75%) of in-house counsels polled described overall opportunities for advancement in their departments as either "limited" or nonexistent. Although many of the 1,278 respondents reported that they had been promoted since going in-house, they said that they were unlikely to get much further. Nineteen percent (19%) said there were no opportunities for advancement whatsoever for them in their department, while fifty-six percent (56%) percent said opportunities were limited.
What does it mean for you? If you think that with time you will enjoy promotions including a better title or a significant increase in pay, you may be going in with unrealistic expectations. Most corporate legal departments are small or flat in terms of structure; therefore, title promotions or elevation to other roles tend to be rare. Unlike law firms where you move up class levels every year, and enjoy significant pay raises, when transitioning in-house you may find yourself in the same position for many years to come, with pay raises that average 3-5% a year.
Most in-house counsels bid their times and move up only when a more senior counsel decides to retire or to transition to another company. In fact, the best chance for advancement may be jumping to the legal department of another company. Companies with larger legal departments of fifty or more attorneys, usually have more avenues for advancement. They may have a more hierarchical structure to enable its attorneys to move up to more senior roles with more responsibilities and greater levels of compensation. That said, in-house attorneys don’t have the same clear and linear career path as their law firm counterparts, and opportunities for advancement for the most part are limited. Before you make any decisions, you need to ask yourself whether you are ready to bid your time and live with fewer opportunities for advancement.
Conclusion
Before you start polishing your resume and look for in-house positions, make sure you’ve gained the experience you will need to succeed in-house, that you are able to let go of your attractive law firm compensation package, and can work in an environment where your career path will not be a straight line.
The trade-offs are far from perfect; however, most lawyers who made that transition with open eyes insist that going in-house was a decision they would make again. Gripes and all, in-house lawyers are nearly unanimous in preferring the more complex path they've chosen. How do we know? Only 1 percent of in-house lawyers say they'd like to be at a law firm.
What To Consider Before Accepting That In-House Offer?
You've spent the last few months updating your resume, evaluating opportunities, and interviewing. Finally, all of the hard work has paid off, and what you have been waiting for has arrived: an offer to join a company as an in-house counsel. However, while you may feel a sense of relief, accomplishment, and happiness, you may also feel a sense of anxiety and uncertainty. Determining whether to accept an offer and the company for what they are can be as difficult as any decision you will have to make during the course of your career. Here are a few factors to considered when deciding whether or not to accept an in-house offer.
1. Compensation. Even if money isn't what gives you the most job satisfaction, no one can argue its importance. Most of us want to make sure we are being paid what we're worth and what the going rate is for jobs similar to ours. You need to conduct research as to whether the offer is in step with market, and obtain information on how your offer compares to what others are making at the same level, in the same industry, with companies of similar size and status, and in the same geographic region.
You need to do some independent research to obtain this information —and unfortunately there is no "one stop shop" to obtain this information. You will need to search the internet, and review surveys published by organizations like Altman Weil, Lexis-Nexis, ACCA, or Corporate Counsel, etc. You may also want to turn to legal recruiters with experience in the in-house legal marketplace. They may be able to provide you with this data, as well as give you information regarding the company's particular compensation structure. If you are already working with a legal recruiter, they may also be invaluable in helping you negotiate your offer where appropriate.
If you are coming from private practice, you may have to bite the bullet and take home a smaller paycheck. The median base salaries for in-house attorneys with a minimum of 5 years of experience remains steady at $100K-$150K per year, with bonuses averaging 20%-30% of base. While deferred compensation, including bonuses, has risen considerably, the majority of national law firm attorneys with 5 years of experience transitioning to traditional in-house staff positions can experience compensation reductions ranging between 50%-70%.
2. Financial Stability. The financial heath and stability of the company you are joining is one of the most important factors to consider. Where is the company heading? Is there a merger on the horizon? Will it be going public? Is it doing well enough financial to ensure its future existence?
The financial stability of a company refers simply to whether it is doing well in business or not. There are various ways that it can be measured, but in the end they all add up to the same thing: is this company in sound financial shape or isn't it? If it is, then the company is probably a quality one that will continue to be viable into the future. If not, well...you may have to seriously re-think your offer.
Large Companies: Most larger companies are publicly traded, and there are various resources around that can help you determine their status in approximate terms. Public American firms are required by the Securities and Exchange Commission to publish certain financial data; it is usually fairly easy to find. What have their earnings been like for the last year? Look at their sales trend over the last year or two as well.
Also look at the stock price: stocks can be volatile, but a steep decline could be a sign that someone is worried about something! Also, check discussions of the company in the various media for any rumblings of potential financial distress: when big companies get into serious trouble, rumors start flying. Just remember that rumors can be unreliable too.
Small & Privately Held Companies: Smaller and privately held companies can be harder to assess. You have to research the company in general terms, look at how long they have been in business, and most importantly, what they are doing now. It is advisable to have in-depth discussions with the business executives about their short and long-term plans, their current funding, and level of activity.
Typically, when small companies get into trouble, their service and reputation begin to seriously suffer, so that's what you want to look for. There usually isn't much more that you can do other than that. Obviously, if you are being offered a General Counsel role, you should ask to review the company's financial statements. However, if you've applied for a staff counsel position, you may have to rely on the good faith of the company's representatives. Private firms aren't required to make public their finances, and they will not likely want to share this information with you.
3. Opportunities For Advancement. In private practice, attorneys move from student to associate to partner. But in-house attorneys don’t have the same clear career path, and opportunities for advancement can be seen as limited. Before you make any decisions, you need to ask the right questions, and do your homework.
Small Legal Departments. If you are joining a small legal department with five or less attorneys, you may find that there is no room at the top, or no room to grow. You may soon realize that the general counsel isn’t going anywhere, and that you may have to move on to move up — unless you want to keep doing the same work year after year, and are willing to wait for that general counsel to step down.
That said, small departments may be better situated to see a greater breadth of legal issues, keeping repetitive work to a minimum, and allocating more repetitive work to outside counsel. You need to have a clear understanding of the work you will be expected to handle, as well as the succession plan, if any, the legal department might have in place.
While you may not be actually changing positions or title in a smaller legal department, you may be more likely to obtain raises. Many attorneys in legal departments that are fairly small or flat, see their paychecks get larger as they get better at their jobs. If title and prestige is not on top of your list, and you are willing to bid your time for the top spot, this may be the right option for you.
Large Legal Departments. Companies with larger legal departments of fifty or more attorneys, usually have more avenues for advancement. They may have a more hierarchical structure to enable its attorneys to move up to more senior roles with more responsibilities and greater levels of compensation. Companies with worldwide operations may also be able to promote its attorneys by making them responsible for a country or geographic area, or for a specific legal subject matter within a region.
Some companies, irrespective of the size of their legal department, may also open up opportunities to its attorneys to move within its business ranks. This is a trend that has become more popular over time, especially as general counsels have become increasingly involved in the business of the companies they represent. There are many more general counsels moving to CEO and COO positions within companies. More junior-level attorneys have made successful transitions to other executive-level business positions. Some companies even offer MBA tuition programs, and other business training to help elevate some of its top attorneys to business positions.
That said, even when a hierarchy exists within the legal department, attorneys often don’t know what skills they need to learn to get to the next level, or what opportunities exist outside the legal department. Therefore, before you make your next move, be sure to discuss your career aspirations with your potential employer, so that they are aware of what opportunities you might be interested in.
If you are operating in a smaller legal department, try to develop business skills that increase your value to the company, and be ready to approach executive management about financing course work or business degrees. Having the flexibility to learn new skills and reinvent one’s self can keep your job challenging and make you available to more opportunities.
3. The People & Culture. Every company possesses a culture that can range from traditional and conservative to entrepreneurial and liberal. This is where the impressions that you formed during your interview will help you determine whether the particular company environment is right for you.
Were people talking to each other when you walked the halls? Were the doors closed or open? Was the staff treated with respect? How did the business executives interact with each other? How do the business executives interact with their attorneys? How formal or informal was the interview? How did people dress? Was the office decorated in traditional oak panels and dull colors, or was it modern, with bright art and lights?
Finding an environment that reflects not only your personality, but also your ability to effectively develop professionally is a key element in your future success as an attorney. Certainly, many attorneys can be happy and thrive personally and professional in completely different environments. What you need to determine is what environment is the right one for you.
Company culture also comprises other factors, including shared attitudes, values, goals, and practices that characterize a company. If you value your time away from the office, a company that consistently requires late hours and weekend sessions may not be right for you. On the other hand, the type of work you seek, the opportunities for growth, and the sophistication of the practice may also translate directly into more hours spent at the office. What you need to determine is whether this is a company that shares your values, goals, and ambitions.
Conclusion. Each of us of course is different, and determining what factors are important may vary greatly depending on the individual. You may attempt to negotiate a higher salary, additional vacation time, and better health benefits. However, these items are often part of a standard package determined by a company’s compensation structure, and you may or may not be able to effectively negotiate them. In addition, other factors, such as a company’s "culture," are also unlikely to change.
The key to making the right in-house move is to do your homework. Each of these factors taken alone may not make or break your decision to accept or decline an in-house job offer. Moreover, these are but a few factors to consider when making a decision. You may also need to consider additional factors that are particularly relevant to your overall professional goals and aspirations.
Whether you choose to accept or reject your job offer, you should contact the employer who made that offer in a timely fashion. Your rejection or acceptance should be done formally, in writing, as well as by telephone. The business community is a small one, and you may at some point develop a relationship with that employer as a superior, a colleague, a client, or even your next-door neighbor. Therefore, irrespective of your decision, one of the most important things you should consider when mulling over a job offer is the importance of safeguarding the relationships that were created during this process.
Remember to keep an open mind, ask questions, do your research, and weigh all the factors carefully. Your dream job might just be around the corner...
The New Gold Rush: Moving In-House.
What is it about going in-house that seems to increasingly draw attorneys from law firms to in-house legal departments? According to NALP, the attrition rate for experienced attorneys with about five years of experience jumped dramatically, from 60 percent in 2000 to 78 percent in 2005. These attorneys expressed concerns regarding their work/life balances, rising billable requirements, business development demands, repetitive work, and unlikely prospects of becoming partners. Take a look at the following article that discusses the factors prompting a growing number of attorneys to transition from law firms to in-house legal departments. What do think about this trend?Awards
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